Jewellery chains drop stores and expensive goods as luxury spending falls to five-year low

Jewellery stores are scaling back their Hong Kong operations and replacing stock with less expensive items as luxury spending slumps to a five-year low.

The rollback came as the Retail Management Association warned yesterday that the retail sector might deteriorate further following declining sales for the first half of this year.

Association chairwoman Caroline Mak Sui-king expressed pessimism about the prospect of a rebound in the coming months and urged the government to set up a cross-departmental task force looking into ways to boost the sector.

Weak sales performance was behind retail chain Chow Tai Fook's plans to close four stores when its current rental agreements expired this financial year, according to a spokeswoman.

"[There is] a notable trend of high-spending mainland Chinese tourists being attracted to other overseas tourist and shopping destinations such as South Korea, Japan and some European countries as a result of their currency depreciation and relaxation of tourist visas," she said.

Competing retailer Lukfook Jewellery, meanwhile, said it would be coping with a 22 per cent quarterly drop in Hong Kong profits by switching to lower-value products to appeal to consumers.

"For example, our diamond rings in the past might be 50 carats, which were the most popular - now we will have more 30-carat diamonds," a Lukfook spokeswoman said.